Ladies and gentlemen, thank you for your patience. This call will begin shortly. Once again, thank you for your patience, and this call will begin shortly.

Good morning, everyone. And welcome to Sify Technologies Limited's Financial Results for the first quarter fiscal year 2026. At this time, all participants are placed in a listen-only mode. The floor will be open for questions following the presentation. Please note this conference is being recorded. I will now turn the conference over to your host Praveen Krishna of Sify Technologies Limited. Praveen, the floor is yours. Thank you, Janine. I'd like to extend a warm welcome to all our participants on behalf of Sify Technologies Limited. I'm joined on the call today by Mr. Raju Vegesna, Chairman, and Mr. M.P. Vijay Kumar, Executive Director and Group CFO of Sify Technologies Limited. Following our comments on the results, there will be an opportunity for questions. If you do not have a copy of a press release, please call Webber Sandrik at 1-212-546-8260, and we'll have one sent to you. Alternatively, you may obtain a copy of the release at the investor information section on the company's corporate website at www.sifytechnologies.com/investors. A replay of today's call may be accessed by dialing in on the numbers provided in the press release or by accessing the webcast in the Investor Information section of the Sify Technologies Limited corporate website. Some of the financial measures referred to during this call and the earnings release may include non-GAAP measures. Sify Technologies Limited's results for the year are according to the International Financial Reporting Standards, or IFRS, and will differ somewhat from the GAAP announcements made in previous years. A presentation of the most directly comparable financial measures calculated and presented in accordance with GAAP and a reconciliation of such non-GAAP measures and of the differences between such non-GAAP measures and the most comparable financial measures calculated will be made available on Sify Technologies Limited's website. Before we continue, I'd like to point out that certain statements contained in the earnings release and on this conference call are forward-looking statements. Rather than historical facts, they are subject to risks and uncertainties that could cause actual results to differ materially. Those described. Respect to such forward-looking statements, the company seeks protection afforded by the Private Securities Litigation Reform Act of 1995. These risks include a variety of factors, including competitive developments, and risk factors listed from time to time in the company's SEC reports and public releases. Those lists are intended to identify certain principal factors that could cause actual results to differ materially from those described in the forward-looking statements but are not intended to represent a complete list of all risks and uncertainties inherent to the company's business. I would now like to introduce Mr. Raju Vegesna, Chairman of Sify Technologies Limited. Chairman?

Thank you, Praveen. Good morning, and thank you for joining us on the call. As India is entering into a new generation of IT transformation, I firmly believe that the next decade of digital infrastructure will be written in India. The pace at which public and private enterprises are investing in technology, cloud adoption, and automation is unmatched, driven by an urgency not just to participate in the digital economy, but to lead it. Government policy, industry ambitions, and a vibrant innovation ecosystem are combining to create a perfect storm of opportunity. National programs like Digital India and the India AI mission are bringing in investment in compute infrastructure and digital access, while regulatory clarity is unlocking private capital into hyperscale data centers, 5G, and beyond. India is not just consuming AI; it's rapidly climbing up the value chain to become a creator of IT tools, frameworks, and domain-specific solutions. This ambition will translate into robust demand for integrated infrastructure that supports high-performance workloads, edge computing, and sovereign data requirements. India will not just be the growth market; it will be the growth engine. Let me now bring in our Executive Director and Group CFO, Mr. M.P. Vijay Kumar, to explain both the business and the financial highlights of the last quarter. Vijay Kumar?

Thank you, Chairman. Greetings to all. We remain steadfast in our commitment to cost efficiency and fiscal discipline as we navigate an increasingly complex business environment. Every investment decision is made with long-term value creation in mind, overseen by a rigorous approach to risk management and effective execution. While our current results reflect the impact of depreciation, interest cost, and increased manpower expense, these are highly conscious trade-offs in our strategy to build future-ready capabilities across our businesses. At the same time, we are embedding sustainability as a foundational business tenet beyond the requirements of regulatory compliance. Ultimately, our focus remains on delivering predictable long-term value to the stakeholders while staying true to our disciplined investment philosophy and high standards of accountability. Let me now expand on the business highlights for the quarter. The revenue split between the three businesses for the quarter was: network services 41%, data center colocation services 37%, and digital IT services 22%. During the quarter, Sify Technologies Limited commissioned 8.6 megawatts of additional data center capacity. As of December 2024, Sify Technologies Limited was providing services via fiber nodes across the country, and since then, we have seen an increase of 14% over the same quarter, quarter on quarter. Sify Technologies Limited has deployed about 9,473 contracted SD-WAN service points across the country. A detailed list of our key wins is recorded in our press release, which is now live on our website. Let me briefly sum up the financial performance for quarter one of financial year 2026. Revenue was INR 10,723 million, an increase of 14% over the same quarter last year. EBITDA was INR 2,111 million, an increase of 18% over the same quarter last year. Loss before tax was INR 322 million, and loss after tax was INR 388 million after considering the tax on the profits from our data center subsidiary. Capital expenditure during the quarter was INR 2,874 million. I will now hand over to our Chairman for his closing remarks. Chairman?

Thank you, Vijay Kumar. In the quarters to come, we will deepen our focus on enabling AI workloads and attracting a new generation of forward-thinking enterprises. With our integrated infrastructure, digital infrastructure, and proven service maturity, we are uniquely positioned to lead. I thank you for your continued belief in our journey. We remain energized by the possibilities that lie ahead. Thank you for joining on this call. I will now hand over to the operator for any questions.

Thank you very much, Chairman. At this time, we will be conducting our question and answer session. If you would like to ask a question, before you press the keys. Please wait a moment whilst we poll for questions. Thank you. Your first question is coming from Greg Burns of Sidoti and Company. Greg, your line is live.

Good morning. Could you provide an update on the data center capacity that you added this quarter? Can you just remind us how much data center capacity has already been commissioned and in operation and maybe what your expectations are for the next twelve months in terms of how much capacity you expect to be coming online?

Yes. So two things. One is two greenfield data center projects at the National Capital Region, Delhi, and at Chennai have gone live in the last four months, both of which have a design capacity of 26 megawatts each. From the operational capacity perspective, about 8.6 megawatts got added in the quarter, taking the total operational built capacity available for sale to 138 megawatts.

Okay. Great. Thank you. And then I guess is there a timeline or a roadmap for other greenfield data centers that you're bringing online this year, or is that not something you're ready to share?

Yes. There are two data center facilities which are coming up in Mumbai that are under construction, which will go live later in this financial year. Both of them have a design capacity of about 52 megawatts. Besides that, there is another greenfield project also under construction, the details of which we'll discuss once the project reaches a more advanced stage of completion.

Okay. Great. Thank you. And I just wanted to talk a little bit about the pay-per-use colocation AI model that you expressed released a couple of months ago. Can you just talk about how that model works? What kind of investment is required on your end, and maybe what you expect the returns to be, the payback period, or the types of returns you expect to get on that model? Thank you.

Okay. So, Greg, the way the payback colocation model works is that we have three data center campuses: Mumbai, Chennai, and Noida, all certified by NVIDIA. We are the first approved by NVIDIA for liquid cooling for 130 kilowatts per rack. The way these data centers are ready to use liquid cooling, and now we are offering Kolo as a per usage model for those who want to host their GPUs in one of these facilities. We have taken about five or six different GPU types from NVIDIA and we are offering services on a per hour, per demand, per monthly, and per year basis. This way, anyone looking to deploy an AI cloud for training or inferencing can host with us. This model is unique and we are seeing some interest. All these three centers are capable of executing this. We have just started and there is global interest.

Okay. Great. Thanks. So just so I understand, you are buying your own GPUs hosting them in your own facilities and then leasing them out on a per-use basis. That's what's happening here? That's the model?

No, no, no. We are not buying GPUs. Customers can bring their own GPUs, and we can offer a pay-per-use model. So, for example, if we look at GPU per hour, they are charged accordingly. To complement that, if someone has their own GPUs, they can bring them, and we offer a colocation model to match that GPU pricing, allowing for a pay-per-use service.

Yep. Okay. Okay. Thanks. And then, Vijay, you talked about how you've been investing into the business and how that's maybe detracting from near-term profitability, but obviously, you expect to benefit from that over time. Is there a timeline on when we might see a little bit more leverage flowing through the model? Is there a horizon for that? Is it a one or two-year investment period that's still going on? Is there anything you could help us with regarding the future and when we might see a little more leverage in the business?

Yes. As you would have observed from the press release, segment reporting shows that the network business and the data center business are doing pretty well. The digital IT services is the business where we continue to invest in people to build capabilities. In terms of a horizon at this point, while I don't want to sound overly optimistic, I see anywhere between twelve to eighteen months for us to start seeing results from the efforts we have exerted over the last two years.

Okay. Great. That's very helpful. Thank you. Thank you very much.

Your next question is coming from Mihir Sakar of Pritby. Mihir, your line is live.

Thank you so much for the opportunity. So, actually, I'm joining this call for the first time, and I still want to call you to delete it.

Mihir, your technology will be cutting out. It's very difficult to hear. Can you just try a different location? Yeah. Yeah. Just a second.

Okay. May I repeat that? Can you hear me now?

Yes. That's better.

Okay. Thank you. Yes. My question was regarding the data center business. What is our current capacity after the 8.3 megawatts that we have added as of today?

One hundred and thirty-eight megawatts of capacity is built and operational.

Okay. And what is our plan for this financial year? How much are we planning to add?

As I was responding to the earlier queries, we have taken two greenfield data center projects live, where both of them have a design capacity of 26 megawatts each. As customer demand builds up, we will keep operationalizing a portion of the capacity.

Okay. Okay. And are there any plans for the IPO of the digital CC Infinite space? On the cards?

At this point in time, we continue to evaluate various sources of raising capital and will be guided by our board as to what would be the best option for raising capital and the timing of the same. We'll keep the market informed at the right time when there's a tangible addition.

Okay. Okay. And on the digital services business, I was going through the detailed segmental report. So on a year-on-year basis, I think so pretty much the top line has been flat and losses have also increased on an operational basis. What kind of plans do you have for the digital services business? Can you paint a picture around why the top line has been flat and what our plans would be to turn this segment around?

The reason for the top line to be flat is a shift in the model where there is a focus more on annuity revenues versus project-based revenues. Previously, the share of project-based revenues was high. We have been gradually moving towards recurring or annuity services business. We will continue to build our annuity business. As for the losses, they are functions of the investment we are making in people. We started this journey about three years back and continue to build our capabilities to remain relevant to the India IT services market, which we are very confident will see India enterprises outsourcing their IT to companies like us.

Okay. And, like, what kind of timeline or horizon have you planned to turn this around into profit?

I don't want to sound overly optimistic. The current plan is over the next twelve to eighteen months; we should see the losses shrink and operating performance improve.

Okay. Okay. And, actually, I was trying to reach out to Mr. Praveen Krishna, who handles our IIM, and I actually wanted to get a more detailed understanding of our business model offline. Would it be possible to arrange a call, or can we connect offline after the call?

You can connect. We will be here.

Yeah. Actually, I already sent you an email a month ago. I will send the email again. What would be the email ID I can use?

[email protected].

Okay. Thank you so much. Yeah. That's it, have a good day.

Thank you very much. Just a reminder, if there are any remaining questions, you can still join the queue by pressing star one. Your next question is coming from Sri Gopal Bajaj, who is a Private Investor. Sri, your line is live.

Sir, good evening. This is Sri Gopal Bajaj here. Thank you for the opportunity. I have a couple of questions that are, you know, more or less in line with what I have asked in the previous earnings call as well. The first question would be whether the newly opened Chennai data center has now started adding to the revenue.

Yes.

Okay. Okay. The second thing is that, given that you're an IT services company, I would have thought the EBITDA margin should expand, right? I mean, closer to the 25% range. But I see that it's consistently always in that 19-20% range, including this quarter at roughly 20%. When do you see that margin expanding?

Yes. Sri Gopal Bajaj, Vijay Kumar here. We have these three distinct businesses with different capital deployment characteristics. The data center business has an EBITDA margin of close to 45%, the network business has an EBITDA margin of about 18%, and the IT services business is still a work in progress.

Okay. Okay. And for the full year, I know you generally don't give any guidance, but in terms of growth across the three segments, would it be safe to assume double-digit growth for the rest of the year?

That's a wish list all of us work towards.

Okay. Okay. And I see that the network business has always been stable, roughly around 40% of the overall business. The data center, being an emerging growth sector, has slowly crept up from a 25% contribution to the top line to now almost close to 35-36%. I think the digital has been kind of de-growing from 28-29% to now roughly 21-22% this quarter.

You're right. This is in line with the conscious decision that the digital will remain a part of the offering, but we don't see it as a growth driver.

No, no. That will be a growth driver. But there's a change in the business model you were articulating earlier. The digital services formerly used to be more project-based revenue. Whereas now it's more services-based revenue. And when you do annuity recurring kind of a business, revenues are smaller but spread over a longer period. This was a conscious decision we took a few years ago; it's a work in progress as we change the mix.

Certainly, we are trying for that.

I think at 25% margin, everything changes, right? The books look far more accretive.

Our focus is not on the consolidated one because all three businesses have different characteristics. We have bigger aspirational goals, and we are trying to achieve that.

Once we see the IT services business gain traction, we should see that reflecting in the consolidated EBITDA.

Any plans? Will it see a gradual improvement over the next several quarters?

We are certainly working for that.

Thank you for the opportunity. I sincerely thank you for the opportunity and all the best for the future.

Thank you. Thank you very much.

Well, we appear to have reached the end of our question and answer session. I will now hand back over to the management team for their closing remarks.

Thank you for your time on this call. Have a great day. Thank you.

Thank you very much. That does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.